Losers look outward to learn how to control the market, while experts look inward to learn how to control themselves.
The only thing we can control in trading is ourselves, including choosing our own trading strategies, risk management, mentality, working hard to learn and accumulate experience, and improving our level of trading awareness.
1. The market is uncertain and you cannot control the market trends. What you can do is to build a certain trading system to deal with various uncertainties.
The trading system includes three elements: entry, exit, and money management.
Entering the market is the beginning of trial and error, because we have no way of predicting the future trend of the market. You can enter the market based on fundamentals, news, technical aspects, capital flows, etc.
The exit determines whether we can make a profit, and the exit determines your trading logic. The exit must cut losses and let profits run. Only such trading logic can control losses when we lose money and seize it when the market comes.
Fund management includes stop loss, position, product configuration, etc. The core is to strictly control risks when losses occur, so that you can survive and wait for the arrival of the market that belongs to you. Qualified fund management requires diversified investment, winning and rushing, losing and shrinking.
2. The result of trading life = trading thinking x passion x intelligence
Whether you can embark on the road to successful trading depends on the multiplication of the above three factors rather than the addition.
First of all, intelligence, IQ is mostly innate, including health and motor nerves, etc. Passion refers to the enthusiasm and degree of effort at work, which is an acquired factor that can be controlled by one's own will. The scores of these two can be: 0-100.
Because it is a multiplicative relationship, people who are intelligent but lack enthusiasm will not have high scores and good results. On the contrary, their abilities are relatively weak, but because they are aware of their shortcomings, they work hard and are full of burning passion in their trading careers. The results achieved by such people are far ahead of those capable lazy people.
The most important of the three elements is trading thinking. It can even be said that the correctness of trading thinking determines your trading results. Trading thinking refers to the trading concepts, trading logic, trading philosophy, trading ideas, etc. that you recognize.
Why is thinking style the most important? Because it can be positive or negative, it can be below 0 points and can range from -100 points to positive 100 points.
Therefore, no matter how high your intelligence is and how passionate you are about trading, if your trading mindset is wrong, the three factors multiplied together will result in a corresponding negative value.
3. So what is the correct way of thinking in trading? Enter the market with a light position and try and make mistakes, diversify into multiple varieties, cut losses and let profits run.
These words seem to be old-fashioned and are often seen in the trading field, but they are truths that cannot be ignored. There is nothing new on Wall Street. Human nature does not change, and the principles of trading will not change.
Most people know it but do not do it because trading is anti-human. We must not only understand the literal meaning, but also understand it with our brains, and strictly implement these correct trading concepts in transactions. Only when we truly integrate knowledge and action can we truly understand it.
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